Anchor Company purchased a manufacturing machine with a list price of $100,000 and received a 2% cash discount on the purchase. The machine was delivered under terms free on board (FOB)shipping point, and transportation costs amounted to $5,200. Anchor paid $7,500 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $9,800 for the first year of operations. What is the cost of the machine?
A)$98,000
B)$103,200
C)$120,500
D)$110,700

Question

Quizplus · Accepted Answer

List Price = $100,000
Cash Discount = 2% of $100,000 = $2,000
Net Price = $100,000 - $2,000 = $98,000
Freight Costs = $5,200
Installation Costs = $7,500
Insurance Costs = $9,800

Total Cost of the Machine = $98,000 + $5,200 + $7,500 + $9,800 = $110,500

Therefore, the correct option is D, with a total cost of $110,500.

Anchor Company Purchased a Manufacturing Machine with a List Price